Fixed Income Leaders Summit Live Coverage

#FILS

Day 1, June 19th 2019

8:25 am - 9:00 am Buy Side Keynote What are the 3 critical success factors to building a best in class fixed income trading desk that not just survives but thrives in a new market order?

Speakers:

Kevin McPartland, Head of Market Structure Research, Greenwich Associates | Dan Veiner, Global Head of Fixed Income Trading, Blackrock

• BlackRock’s global fixed income trading head, Dan Veiner, says that sell-side relationships remain important for the firm in terms of liquidity provision, balance sheet, research and risk transformation. Relationships with trading venues and platforms have also become increasingly important for accessing liquidity, and some partnerships with certain venues are as important as those with the sell-side.

• Veiner adds that staffing the trading desk remains a challenge. He looks for trade performance, talent and technology when building out the desk, but talent, in his opinion, is at the top of that list. If his staff are vulnerable to being poached by competitors, then that means they are doing it right in terms of developing talent in-house.

• Panellists who joined Veiner for the discussion agreed with his comments, adding that they are actively seeking solutions from vendors and platforms to the challenges they see in the market. For Rich Mazzella at Millennium Management, the biggest challenge remains aggregating liquidity across venues.

Followed by: In conversation with the market…

Speakers:

Rich Winter, Global Head of Product Strategy, FENICS US Treasuries | Rich Mazzella, Deputy Head of Global Fixed Income and Commodities, Millennium Management | Matt Grainger, Head of Electronic Rates Trading, Morgan Stanley

• Rich Winter, Global Head of Product Strategy, FENICS US Treasuries

• Rich Mazzella, Deputy Head of Global Fixed Income and Commodities, Millennium Management

• Matt Grainger, Head of Electronic Rates Trading, Morgan Stanley

9:00 ALL STAR PANEL: The paradigm shift in Fixed Income: How are changes in market structure, liquidity and new products redefining the way you interact with you counterparts across the value chain?

Moderator:

Kevin McPartland, Head of Market Structure Research, Greenwich Associates

Speakers:

Marc Wyatt, Global Head of Trading, T.Rowe Price | Sonali Pier, Executive Vide President, PIMCO | Richard Schiffman, Head of Open Trading, MarketAxess | Haider Ali, Head of U.S. Treasury Trading, RBC Capital Markets Paul Kaplan, Head of Global Credit, TRS and Price Transparency, Bloomberg

• Trading platform providers are focusing on increasing levels of automation with a view towards blending this within their existing offerings, such as all-to-all trading.

• Consistent and reliable liquidity provision remains a key element for both sides of the trade and venues must continue to prioritise this to ensure clients are happy.

• Data and compliance requirements are vital for the buy-side and the role of Transaction Cost Analysis will be important to continue this work.

• The buy-side are increasingly playing the role of price maker in the fixed income markets and the majority of delegates expect this trend to continue (80%).

9:40 IN CONVERSATION WITH LIQUIDITY PROVIDERS: Redefining a fixed income liquidity provider: How are traditional liquidity providers and new market entrants adapting their business models to provide new avenues of liquidity?

Moderator:

Neal Rayner, Head of US Fixed Income Trading, Janus Henderson Investors

Speakers:

Susan Estes, CEO, OpenDoor Securtities | David Parker, Head of Sales, MTS Markets | Shari Noonan, CEO, Rialto Trading | Elisabeth Kirby, Managing Director, Head of U.S. Rates Strategy and Product Management, TradeWeb | Gregory Garofolo, Head of Electronic Rates Product Strategy and Distribution, Credit Suisse

• The increasing importance of automation is well-understood by liquidity providers in fixed income markets, but a greater focus may come in optionality automation to ensure it is an additive evolution.

• Some sell-side institutions lose sight of the role of the broker in fixed income and may lose out on value-adds as a result.

• Liquidity discovery can be just as important as liquidity provisioning in connecting every participant in the trading chain to the best possible outcome.

• While historic impediments to electronic fixed income trading have largely been addressed, voice trading will continue to play a huge role in this space.

11.10 Fireside Chat: Setting the gold standard for corporate bond trading: How can you enhance access to liquidity and alpha generation through technology, automation and data?

Moderator:

Andrew Awad Managing Director Greenwich Associates

Speakers:

Jim Switzer Head of Credit Trading Alliance Bernstein, Constantinos Antoniades Global Head of Fixed Income LIquidnet

• AllianceBernstein has seen around five years of innovation which has got the firm to where it as the moment. From the launch of its alpha data aggregator tool, to the development of Abbie, a chat bot that is synced with AB’s liquidity and quant models. Abbie sits within the smart order router querying liquidity so that AB knows where to find the liquidity.

• For technology to make a real difference to buy- and sell-side trading desks, firms need to create tools and workflows that free up traders’ time to focus time on executing more difficult or block trades - but sourcing block liquidity remains a pain point today in the market. Ultimately, technology and platforms remain a key part of the ecosystem, bringing value to both the buy- and sell-side.

11.30 ALL STAR PANEL: Navigating the data storm: How can you aggregate and make sense of multiple data sources and turn these into meaningful pre- and post-trade analysis to aid your investment decisions?

• Given its evolution, data in fixed income is more important than ever and not just for the back office, but also the middle and front office. Without data in its base form, including terms & conditions and all of the information that underlines a bond, traders are unable to transact as soon as markets are available in secondary form. Transaction cost analysis (TCA) and best execution are also playing a more critical role, but TCA continues to evolve for fixed income.

• The buy-side is getting data and analysis from multiple sources, and there is no one perfect source. In terms of evaluating pricing and venues, clients want a series of sources that often need to be customised because different firms have different needs.

• The industry has somewhat shifted from heavy post-trade analysis driven by regulation, to using pre- and post-trade data for broker evaluation. The buy-side is using the data and analysis to inform them if dealers are consistently winning or losing out on deals, and also to refine the dealer selection process and decision-making.

Moderator:

Dan Connell Managing Director Greenwich Associates

Speakers:

Tracy Rucker-Wilson Head of U.S Vanguard’s Fixed Income Derivatives, Russell Budnick Head of Taxable Fixed Income JP Morgan WM, Scott Eaton CEO Algomi, Ruben Costa-Santos Head of FX and Fixed Income Virtu Financial, Lynn Martin President and COO ICE Data Services

12.10 FIRESIDE CHAT: Leveraging technology to capture opportunity in an evolving market

Speakers:

Chris Concannon President and COO MarketAxess, Amy Hong Global Head of Market Structure Goldman Sachs

• MarketAxess COO, Chris Concannon, says the fixed income industry has lessons to learn from the equities market about what does and does not work. But automation is taking hold steadily as a key driver in the marketplace. Automation is about doing more with less, and scaling the workflow back and making it more efficient, starting with simple things like straight through processing and reducing the touch points and time people spend booking trades manually.

• Concannon adds that one area he is seeing develop is the request for quote (RFQ) space, which is rapidly evolving in Europe through request for market (RFM). MarketAxess is also increasingly looking at how the buy-side rests orders. In the fixed income market the buy-side is holding the order on the desk and engaging the market for a price, rather than establishing the price. He envisions the buy-side will eventually establish the price, and place it somewhere where the market can see it.

12:50 OXFORD STYLE DEBATE: True or false: The current methods of fixed income TCA are sufficient enough to offer adequate execution analysis for fixed income products.

Moderator:

Miles Kumaresan, Former Global Head of Trading & FinTech, Nordea Asset Management

Speakers:

Alex Budny Global Head of Trade Analytics SSGA, Vidya Guruju Product Manager, CFA Charles River Development, Lee Sanders Head of Execution FX and UK & Asia Fixed Income Trading AXA Investment Management

• * TRUE: Data can never be perfect but having access to as much analysis around a trade can provide unexpected insights. While results will be subjective, TCA means different things to different market participants and can offer new perspectives.

• * FALSE: TCA is too largely designed for equities to work in the fixed income markets across all the sub-asset classes. Buy-side firms should be more concerned with the process and getting the execution outcome for the client that analysing costs.

TRACK B - RATES

14:20- Interview - The end of the road: How to navigate your portfolio as we near the end of one of the longest interest rate cycles in the US and around the world.

Moderator:

Zack Ellison, CFA, CAIA, Head of Development, Applied Real Intelligence LLC

Speakers:

Anne Mathias, Head of Global Macro, Interest Rates, and Foreign Currency, Vanguard | Anne Walsh, CIO, Fixed Income, Guggenheim Partners

• Looking at inflation, with the trade war failing to generate higher inflation expectations, panelists agree that asset price inflation and its potential impact on change in market volatility and sentiment could be significant. Everything is rallying at the moment, but that wont last forever so the best thing firms can do is hedge their bets.

• When looking at fixed income, specifically rates and credit, it’s important to think about currency and being thoughtful and purposeful about exposures to currency by choosing not to hedge against certain exposures. The rate market can be beholden to central bank activity and it moves with currencies too. There’s an opportunity there to expand the thinking and opportunities with FX on both the buy- and sell-side.

TRACK B - RATES

14:50 EVALUATING THE US TREASURY ECOSYSTEM: What are the benefits of moving to a more electronified and direct liquidity streaming model?

Moderator:

Kevin McPartland, Head of Market Structure Research, Greenwich Associates

Speakers:

Michael O'Brien, Global Head of Trading, Eaton Vance | Bryan Farrell, Head of Sales, Liquidity Edge | Steven Bartfield, Senior Vice President BrokerTec Strategy and Business Development, BrokerTec, CME Group | Mark Bruce, Head of FICC, Jump Trading

• There is no ‘one best’ to trade in US Treasuries; what works for one firm or trade may not work for another, but the direct streaming model does bring benefits that have already been realised in the equities and foreign exchange.

• While all fixed income markets are undergoing a period of evolution, the mistake is to take an “all or nothing” approach (i.e. adopt one model only) which would result in sub-optimal outcomes for clients or missed opportunities.

• It is highly unlikely that a pure bilateral model will occur in US Treasuries as it is too much work for a firm to take on and there is value in what intermediaries can offer, particularly with the direct streaming model and there will always be a need for request for quote (RFQ).

TRACK B - RATES

16:30 LISTED DERIVATIVES – OTC DERIVATIVES – PANEL: Assessing the implications of moving from LIBOR to an alternative benchmark: How can you smoothly as possible shift your entire legacy contracts into this new format?

Moderator:

Audrey Blater, Senior Analyst, AIte Group

Speakers:

James Wallin, Senior Vice President, Alliance Bernstein | Tracy Rucker-Wilson, Head of US Fixed Income Derivatives, Vanguard | Subadra Rajappa, Head of US Rates Strategy & Member of the Alternative Reference Rate Committee, Societe Generale | Glenn Havlicek, Chief Executive Officer & Co-Founder, GLMX

• The Secured Overnight Financing Rate (SOFR) is due to replace LIBOR in 2021, however this represents a huge sea change for rates as it is considered backward-looking compared to the current model.

• The change will effect risk models, documentation, cost bases and non-linear elements, such as vendor and data provider relationships, which will incur a huge amount of work for firms that still don’t know the exact mechanics of how the new system will operate.

• Firms must begin to prepare as soon as possible for SOFR by taking stock of their current position, assessing how far along they in their preparedness and watching where liquidity pools are building.

• Regulators have been passive so far but will eventually move to take a harder line on firms, with individual accountability for SOFR now being the most likely route.

TRACK B - RATES

17.10 LISTED DERIVATIVES - CASE STUDY: The outlook for clearing post-Brexit

Moderator:

Audrey Blater, Senior Analyst, AIte Group

Speakers:

Christian Dopp, Senior Vice President in Fixed Income Sales, Eurex

• Uncertainty is the key word when it comes to Brexit. UK is in a tricky situation as it continues to appoint a new prime minister, but new Brexit deadline of October 31st is a certainty. The uncertainty is the toughest scenario out of all the possible outcomes of Brexit because firms cannot prepare.

• Clearing continues to go through a transitional phase, and adding Brexit to the mix means we will likely see further fragmentation between London, the US and Asia.